Estimating Your Long-Term Solar Savings: A Simple Canadian Model
Introduction
Solar panels aren’t just about upfront costs—they’re about locking in decades of energy savings. But how do you turn a kilowatt-hour into real dollars?
In this post, we’ll walk you through a straightforward Canadian model to forecast your 25-year solar savings. It includes clear steps, transparent assumptions, and a sample calculation you can easily adapt to your own home.
Understanding Annual Solar Production
Before estimating savings, you need to know how much electricity your system will generate each year.
Typical production in Canada: ~1,100 kWh per kW of installed solar capacity.
| System Size | Estimated Annual Production |
|---|---|
| 5 kW | 5 × 1,100 = 5,500 kWh/year |
| 6 kW | 6 × 1,100 = 6,600 kWh/year |
| 8 kW | 8 × 1,100 = 8,800 kWh/year |
Adjustment tip: If you live in a sunnier region like southern Alberta, increase production by up to 10%. If you’re in a cloudier location like coastal B.C., reduce by up to 10%.
Translating kWh Into Dollar Savings
Once you’ve estimated kWh output, multiply by your local electricity rate.
Average residential electricity rates:
- Ontario: $0.12/kWh
- Quebec: $0.10/kWh
- Alberta: $0.14/kWh
| System Size | Annual kWh | Rate ($/kWh) | Estimated Annual Savings |
|---|---|---|---|
| 5 kW | 5,500 | 0.12 | $660 |
| 6 kW | 6,600 | 0.12 | $792 |
| 8 kW | 8,800 | 0.14 | $1,232 |
Time-of-Use Reminder: If your utility uses TOU pricing, use a blended average rate over the year or calculate separate totals for peak and off-peak usage.
Factoring in Degradation and Inflation
3.1 Panel Degradation
Solar panels degrade slowly over time—typically about 0.5% per year.
Year 25: ~87.5%
Year 1: 100% production
Year 10: ~95%
3.2 Electricity Price Inflation
Electricity prices tend to increase over time. A 2% annual inflation rate is a conservative assumption.
| Year | Production (kWh) | Rate ($/kWh) | Annual Value ($) |
|---|---|---|---|
| 1 | 6,600 | 0.12 | $792 |
| 5 | 6,435 | 0.13 | $837 |
| 10 | 6,270 | 0.15 | $941 |
| 25 | 5,775 | 0.20 | $1,155 |
If you expect inflation to be higher (3–4%), you can adjust your forecast accordingly and expect higher cumulative savings.
Projecting 25-Year Cumulative Savings
To calculate total 25-year savings:
Formula:
Total savings = Σ (Annual kWh × Electricity Rate × Degradation adjustment)
You can simplify this using a spreadsheet with the SUMPRODUCT formula across degradation and inflation-adjusted columns.
Quick Estimate:
A 6 kW system in Ontario using 0.5% degradation and 2% inflation yields roughly $25,000 to $30,000 in nominal savings over 25 years.
Sample Forecast: 6 kW System in Ontario
| Year | Production (kWh) | Rate ($/kWh) | Annual Value ($) |
|---|---|---|---|
| 1 | 6,600 | 0.12 | $792 |
| 5 | 6,435 | 0.13 | $837 |
| 10 | 6,270 | 0.15 | $941 |
| 15 | 6,105 | 0.17 | $1,038 |
| 20 | 5,940 | 0.18 | $1,069 |
| 25 | 5,775 | 0.20 | $1,155 |
| ≈ $27,500 total |
Conclusion
Estimating your long-term solar savings doesn’t have to be complicated. With:
- A reliable annual production estimate
- Your local electricity rate
- Thoughtful degradation and inflation assumptions
You can build a realistic 25-year forecast and understand your system’s financial impact.
Ready to see your personalized solar savings?